The Cost Structure of Failure

Our collective problem, as former members of the US middle class, is a mismatch between our cost structures and our frameworks for success.

One the one hand, we have the potential to innovate, niche out, and create success in ways that have never been possible before, and that fact is transforming much of the economy.

On the other hand, we live in world that has an expensive industrial cost structure. Costs that are locked in place by the government or corporate cartels.

This leaves a large and growing segment of the economy stranded. Caught between the squeeze of old cost structures and the call of innovative success. Unemployable yet required to keep moving towards the American Dream under an artificially high cost structure.

Unfortunately, the protected portion of the economy – which includes everything from government services to education to finance to healthcare –appears to be caught in amber. The costs in this section of the economy remain high due to a lack of real innovation, while the number of people able to pay for it declines. This portion of the economy continues to pay well and continues to pay benefits.

Of course, this situation can’t last. These protected industries/jobs will eventually evaporate, under the pressure of innovative automation and a lack of people able to pay their costs. When they do, most of the jobs they provide will evaporate, and the costs associated with them will drop to a small fraction of what they are today.

At that point we’ll be in a much better position to transition to a world of ubiquitous innovation.

The big problem for us in the meantime is bridging that gap. The chasm that constantly threatens economic failure.

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Discussion
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One Response

Bill T.·
February 17, 2014 on 10:58 am

Don’t forget “entertainment” as one of those protected and stranded industries…you could probably spend several entries discussing that one.